Growth and Optimization
How AP Automation Benefits Your Business
Most organizations have finance and accounts payable teams. However, 70% of organizations aren’t automated across their financial processes, especially in accounts payable (AP). Consequently, research shows it currently takes organizations up to 9.5 hours to process a single invoice manually. More importantly, when invoices are processed manually, it can pose a lot of unnecessary risks to an organization.
To help organizations better understand AP automation, Jeanne Dion, Vice President of the Value Experience Team at SAP Concur, spoke with Grace Swain, Senior Consultant at TCG Consulting, about what AP automation is and why it’s important, the different elements of AP automation, how and where to start automating, what the journey to full automation entails, tips for driving change across your organization, and the benefits AP automation brings to your business.
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AP automation: What it is and why it matters
AP automation is the practice of using technology such as e-invoicing, OCR technology, and automated travel and expense and payment solutions to take control of your accounts payable process.
There are many different pieces of AP automation that an organization can tackle, such as AP processing, integration, digitization, supplier portals, payment automation, and others.
A benefit of using technology to automate AP is your organization can gain more visibility into your spend, spend categories, and supplier usage. Such visibility allows you to determine how often you pay certain suppliers and if you need to renegotiate any of your contracts with them to take advantage of early payment discounts and prevent duplicate payments.
Automation technology also provides better reports for decision-making and forecasting cash flow. What’s more, it offers an automated flow with exception processing built in that reduces risk, both internally and externally, and lowers costs. In short, as Dion says, it’s the kind of automation that “can align with signature authority matrices because you can actually control that workflow and it doesn’t just sit in somebody’s head.”
Where to start automating AP
Dion likes to think of AP automation as a journey that has a beginning, a middle, and an end. Swain says if your organization is thinking about automating AP, start small and prioritize what to automate based on what your organization does, where your employees spend the most time, and where your high-risk areas are, as automation is the perfect tool to lower that risk.
For example, if you’re a sales company that has hundreds of employees travelling all the time, your biggest expenses may be travel-related. So, the best place to start might be automating your travel and expense system. By comparison, if you’re a huge manufacturing company that manually processes thousands of paper-based invoices a month or you have a high risk of invoice fraud because your employees are too overloaded with work to scrutinize individual invoices, you may want to start automating by setting up a supplier portal where your suppliers can digitally submit their invoices to your AP team.
During the middle stage of your organization’s journey, you might transition to an OCR technology that automatically reads an invoice and matches it to a purchase order. Or, later, integrate your process with your ERP system. “It’s a little bit like a set of Legos where you can keep adding on over time,” Swain explains.
Plus, when you take this approach, your whole organization benefits. “It’s not just one piece that you reduce risk on,” Dion says. “It reduces risks in every single area of the organization.”
That said, a crucial part of automating AP processes is having a strong executive sponsor who can drive change across your organization and make your team feel like they’re part of it. This includes ensuring everyone is well-trained, educated, and ready to help the AP team. “The scariest thing for the people who are in the day-to-day is not knowing what their job looks like in three, four months,” Swain says. It’s important to show them that their job isn’t going away, but rather how their job is changing into higher-level activities.
Dion agrees and adds, “It doesn’t reduce the workload, it just changes how you do it. In the customers that I’ve worked with implementing invoices, and even in the past groups that I’ve worked in, anytime we’ve automated a process, the actual amount of work has never really lessened. The manual effort has lessened, but it’s opened up entire opportunities and horizons for all of us because now we were able to see things we didn’t have time to see before, or we were able to spend time fixing problems that really mattered instead of getting caught up in things that really didn’t need our attention.”
AP automation: The more efficient and effective way to manage spend
In the end, AP automation is really about having the power to manage your organization’s spend in a far more efficient and effective manner. And since automation tools can help significantly streamline AP processes, even the Public Company Accounting Oversight Board (PCAOB) is considering changing its guidelines for completing documentation from 45 days to 15 days. They specifically stated the reason is because automation tools and software make it much easier for everyone to complete their documentation earlier.
When your organization has manual procedures and invoicing, not only are you delaying the process, but you could also be adding to your workload if you enter something incorrectly and the auditors ask you to increase your sample size. “That’s going to be really heavily weighing on the AP resources that are at the same time juggling their day-to-day responsibilities and having to get all that documentation over to the auditors in an even shorter amount of time,” Swain says.
If your organization needs to automate AP processes but isn’t sure where to start, SAP® Concur® solutions can help. We’ll show you where to step into AP automation and the actions needed to gradually transition to full AP automation over time — at your own pace and budget.
